Economics @ ITT

The Myth of Competitive Markets

Posted in economics by ittecon on August 5, 2013

This blog doesn’t have much material yet, but what it does have is promising.

What [do] orthodox economists say about this lack of realism [in models of perfect competition]? Simple: they minimize it by saying that all scientific models are in some measure unrealistic. However, as already mentioned, the model of perfect competition is not a simplification of reality but rather is openly at odds with reality . But orthodox economists have an answer yet. They say: “This model is only the basis and principle of our research program. After, starting from this we will develop other models of imperfect competition more realistic, with market power, product differentiation, barriers to entry and uncertainty. The student only needs to be patient. Little by little as he progresses in his courses, will go looking models more and more realistic”. Here we have, therefore, the grand means of redemption that has neoclassical theory to its unrealism: the method of “successive approximations”.

The first thing we must say about this is that it is a big scam. In effect, during the first years of study is said to economics students that they will study models more and more realistic, but later, already explained the models of imperfect competition monopoly, oligopoly and monopolistic competition, economic theory courses become much more unrealistic and abstract.

via The Heretical Economist: ECONOMICS FOR HERETICS: EXPOSING THE MYTHS OF ORTHODOX ECONOMICS Extract from Chapter 5 – “The Myth of Competitive Markets”.

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What do Economic Models Tell Us about Elections?

Posted in economics, employment by ittecon on June 4, 2011

Nate Silver’s article explains the relationship between GDP, inflation, and the election of the incumbent party’s candidate for president.